The Ultimate Guide to Your UK Armed Forces Pension: AFPS 75, 05 & 15 Explained
Planning for life after leaving the service is one of the most important financial steps a member of the UK Armed Forces can take. The pension you earn is a valuable, lifelong benefit, but the various schemes—AFPS 75, AFPS 05, and AFPS 15—are notoriously complex. Understanding which scheme you are on and what it means for your future can feel overwhelming.
This guide is designed to demystify the UK Armed Forces pension landscape. We'll break down the key features of each scheme, explain the core concepts like reckonable service and final pensionable pay, and show you how to get a clear estimate of your future benefits.
Why Your Armed Forces Pension is Your Most Valuable Asset
Unlike most private pensions, which are 'defined contribution' schemes subject to stock market performance, the Armed Forces Pension is a 'defined benefit' scheme. This means your pension is a guaranteed, inflation-proof income for life, based on your salary and length of service. This security is an incredibly valuable asset that provides a stable foundation for your retirement planning.
A Tale of Three Schemes: AFPS 75, AFPS 05, and AFPS 15
The scheme you are on primarily depends on when you joined the service. Many long-serving members may have benefits accrued in more than one scheme. For official, in-depth details, resources like the Forces Pension Society are invaluable.
AFPS 75: The Original Final Salary Scheme
This scheme is for personnel who joined before 6 April 2005. It's known for its Immediate Pension (IP) point, which allows members to start receiving a pension immediately upon leaving after completing a certain period of service (e.g., 22 years from age 18 for Other Ranks, or 16 years from age 21 for Officers).
- Calculation: Based on your final rank and reckonable service.
- Lump Sum: Automatically includes a tax-free lump sum of 3 times the annual pension.
- Pension Age: The pension is paid immediately if you serve to your IP point.
AFPS 05: A Modernized Final Salary Scheme
For those who joined between 6 April 2005 and 31 March 2015. This scheme was designed to be simpler than its predecessor.
- Calculation: Based on your final pensionable pay (usually your best 365 consecutive days of pay in your last 3 years).
- Lump Sum: There is no automatic lump sum, but you can choose to 'commute' part of your annual pension to create one.
- Pension Age: Normal pension age is 65. However, it introduced the Early Departure Payment (EDP) scheme for those who serve at least 18 years and reach age 40, providing an income until the state pension age.
AFPS 15: The Career Average Scheme
This is the current scheme for all new entrants since 1 April 2015, and most personnel from previous schemes were transferred to it on this date. It works differently from final salary schemes.
- Calculation: Each year, you 'bank' a pension worth 1/47th of your annual salary for that year. This amount is then increased each year by the Consumer Price Index (CPI) until you retire. Your final pension is the sum of all the revalued 'pots' you've accrued throughout your career.
- Lump Sum: Like AFPS 05, you can optionally give up part of your annual pension for a tax-free lump sum.
- Pension Age: Normal pension age is 60. An EDP is also payable for those serving at least 20 years and reaching age 40.
Key Terms and Calculations Explained
While each scheme has its nuances, they share common concepts.
- Reckonable Service: The total time you've served that counts towards your pension.
- Final Pensionable Pay: The salary figure used to calculate your pension. For AFPS 75 and 05, it's based on your pay near the end of your career. For AFPS 15, your pay each year is what matters.
Getting a Ballpark Figure: Using a Pension Calculator
Official calculations are complex and require precise service data. However, a simplified calculator can provide a valuable estimate for financial planning. It helps you visualize how changes in your final pay or years of service might impact your retirement income.
Our Armed Forces Pension Calculator uses a generalized model to give you a quick, illustrative projection of your annual pension and potential lump sum. It's a great starting point for understanding your potential benefits.
How to Get an Official Forecast
For precise financial planning, nothing beats an official forecast. You are entitled to request a pension forecast from Veterans UK. This will provide a detailed breakdown of the benefits you have accrued. You can request a forecast through the GOV.UK website.
Plan Your Future with Confidence
Your Armed Forces pension is a reward for your years of dedication and service. Understanding its value and how it works is the first step toward a secure and well-planned retirement. By using estimation tools and seeking official forecasts, you can take control of your financial future.